Friday, February 13, 2015

Ackman: We Need to Recapitalize Fannie and Freddie

Ackman: We Need to Recapitalize Fannie and Freddie

VIDEO:

Feb. 12 -- Pershing Square's Bill Ackman comments on Fannie Mae and Freddie Mac. He speaks with Bloomberg's Stephanie Ruhle at the 2015 Harbor Investment Conference in New York.

Bill Ackman Bullish on Fannie Mae, Freddie Mac

Bill Ackman Bullish on Fannie Mae, Freddie Mac



"It is the most interesting risk-reward that I am aware of in the capital markets right now," Ackman said when asked about his position in the two companies.

He predicted the shares could be worth $40 to $50. 

Thursday, February 12, 2015

Committee on Financial Services

http://financialservices.house.gov/uploadedfiles/fy16_budget_views_and_estimates.pdf

Views and Estimates of the Committee on Financial Services on Matters to be Set Forth in the Concurrent Resolution on the Budget for Fiscal Year 2016
THE GOVERNMENT SPONSORED ENTERPRISES
2
3 After they failed in September 2008, the Government Sponsored Enterprises (GSEs)
4 Fannie Mae and Freddie Mac were placed into conservatorship under the Federal Housing
5 Finance Agency (FHFA). The GSEs failed because of years of mismanagement,
6 unsustainable market practices, and an inherently flawed hybrid business model, and their
7 failure resulted in the costliest of all the taxpayer bailouts. The GSEs remain in business
8 only because the federal government grants them preferential treatment it affords to no
9 other financial institution. For example, the federal government allows the GSEs to
10 conduct new business, even though they are critically undercapitalized. According to their
11 latest 10-K Annual Reports, Fannie Mae was leveraged at 341-to-1 and Freddie Mac was
12 leveraged at 156-to-1. The GSEs’ chronic and critical undercapitalization poses an
13 unacceptable risk to taxpayers.
14
15 To date, Fannie Mae has drawn approximately $117 billion in taxpayer funds, and
16 Freddie Mac has drawn approximately $72 billion. So far, taxpayers have bailed out the
17 GSEs to the tune of $189.485 billion. In exchange for the more than $189 billion that the
18 GSEs drew from the Treasury to prevent them from going bankrupt, the Treasury
19 Department—and thus, the taxpayers—received shares of GSE Senior Preferred Stock.
20 Under the terms of the taxpayer-funded bailouts, the GSEs pay dividends on those shares
21 when they show a profit, but those dividend payments cannot be used to reduce or redeem
22 the shares of preferred stock that the taxpayers still own.

This should say:

THE GOVERNMENT SPONSORED ENTERPRISES
2
3 After they failed in September 2008, the Government Sponsored Enterprises (GSEs)
4 Fannie Mae and Freddie Mac were placed into conservatorship under the Federal Housing
5 Finance Agency (FHFA). They only failed after the conservatorship drew down onto the DTA False losses that never happened!

The GSEs failed because of years of mismanagement, By the USA government meddling 
6 unsustainable market practices, and an inherently flawed hybrid business model, and their
7 failure resulted in the costliest of all the taxpayer bailouts. Again because of the fake draw down by the conservatorship
 The GSEs remain in business
8 only because the federal government grants them preferential treatment it affords to no
9 other financial institution. The treasury takes all their profits in exchange for fannie and freddie holding up american housing for last 6 years from complete disaster.
 For example, the federal government allows the GSEs to
10 conduct new business, even though they are critically undercapitalized. The treasury has taken all their profits each quarter, leaving nothing.
According to their
11 latest 10-K Annual Reports, Fannie Mae was leveraged at 341-to-1 and Freddie Mac was
12 leveraged at 156-to-1. The GSEs’ chronic and critical undercapitalization poses an
13 unacceptable risk to taxpayers. Tell the treasury to quit being the biggest thief in the USA
14
15 To date, Fannie Mae has drawn approximately $117 billion in taxpayer funds, has paid back $130 billion and
16 Freddie Mac has drawn approximately $72 billion.has paid back $92 billion So far, taxpayers have bailed out the
17 GSEs to the tune of $189.485 billion. and were paid back $230 billion for their loan In exchange for the more than $189 billion that the
18 GSEs drew from the Treasury to prevent them from going bankrupt, the Treasury
19 Department—and thus, the taxpayers—received shares of GSE Senior Preferred Stock.
20 Under the terms of the taxpayer-funded bailouts 3rd ammendment, the GSEs pay dividends on those shares
21 when they show a profit, but those dividend payments cannot be used to reduce or redeem
22 the shares of preferred stock that the taxpayers still own. send the taxpayers their shares of stock if they own it, seems like the treasury owns it, not my neighbors and me! 


A letter to introduce a legal stoppage to the HTF and declare the actions unlawful or the conservatorship unlawful is FNF are solvent.

From Yahoo MB
NOT SURE IF ANYBODY WATCHING LIVE ON AMENDMENTS TO 2016 budget BUT VERY FRANK TALK ON FNF .
1. DEMS wanted to increase the housing trust fund.
2. REPUBS denied and are drafting a letter to show legal cause of action by Watt.
3. REPUBS said only three ways to fund HTF and that watt suggesting profit makes no sense.
4. If Watt does not come back with clear legal authority the REPUBS are going to submit to the DOJ
A letter to introduce a legal stoppage to the HTF and declare the actions unlawful or the conservatorship unlawful is FNF are solvent.
This is exactly what I said the REPUBS will fight the funding of the HTF to get the third amendment fixed.
Things are heating up on FNF PERIOD.

FHFA cannot start housing trust fund if Fannie and Freddie are not capitalized, and under current conservatorship they are not! Watt has a problem, and so do democrats.

==============================
the actual law:

12 U.S. Code § 4567 - Affordable housing allocations

(a) Set aside and allocation of amounts by enterprises
Subject to subsection (b), in each fiscal year—
(b) Suspension of contributions
The Director shall temporarily suspend allocations under subsection (a) by an enterprise upon a finding by the Director that such allocations—
(1) are contributing, or would contribute, to the financial instability of the enterprise;
(2) are causing, or would cause, the enterprise to be classified as undercapitalized; or
(3) are preventing, or would prevent, the enterprise from successfully completing a capital restoration plan under section 4622 of this title.

whats is 4622?
(a) Contents
Each capital restoration plan submitted under this subchapter shall set forth a feasible plan for restoring the core capital of the regulated entity subject to the plan to an amount not less than the minimum capital level for the regulated entity and for restoring the total capital of the regulated entity to an amount not less than the risk-based capital level for the regulated entity. Each capital restoration plan shall—
(1) specify the level of capital the regulated entity will achieve and maintain;
(2) describe the actions that the regulated entity will take to become classified as adequately capitalized;
(3) establish a schedule for completing the actions set forth in the plan;
(4) specify the types and levels of activities (including existing and new programs) in which the regulated entity will engage during the term of the plan; and
(5) describe the actions that the regulated entity will take to comply with any mandatory and discretionary requirements imposed under this subchapter.

Monday, February 9, 2015

The Conservatorships of Fannie Mae and Freddie Mac: Actions Violate HERA

The Conservatorships of Fannie Mae and Freddie Mac: Actions Violate HERA and Established Insolvency Principles



Unfortunately, Treasury's and FHFA's actions in the conservatorships of the Companies after the 2012 Third Amendment and the advent of the net worth sweeps violate these longstanding principles of U.S. and international insolvency law as well as the express requirements of HERA. Since HERA was designed to mirror the FDIA conservatorship and receivership provisions, including the creditor protections, it should be interpreted consistent with long-standing interpretations of the parallel FDIA provisions.
The fundamental goals of FDIC interventions into open banks always were to restore the banks to financial health in compliance with regulatory requirements and recover, wherever possible, the FDIC funds injected into the banks.
However, as implemented by Treasury and FHFA, the Companies’ conservatorships serve principally as the instruments for government management of national mortgage policy and enrichment for Treasury. The Companies remain the principal sources of liquidity to the U.S. mortgage industry and the dominant secondary mortgage market companies through their issuance of guaranteed mortgage-backed securities, and have produced billions of dollars of new value. Despite having been repaid far more than it injected into the Companies, Treasury has ignored the creditor protections required under HERA or, for bank shareholders and other stakeholders, under the FDIA by using the conservatorships to strip all value from the shareholders, rather than complying with the HERA requirement that it "preserve and conserve" the Companies for the benefit of all stakeholders. In addition to violating the fundamental element of creditor protection required by statute and the principles underlying all insolvency laws, Treasury has consciously prevented accumulation of any buffer against future losses - thereby ensuring that taxpayers will again bear the risks. Treasury has purposefully refused to return the Companies to a "sound and solvent" condition as required by HERA. In internal documents, Treasury officials have expressly stated that Treasury will not allow the rehabilitation of the Companies or any return of value to the stakeholders. This is all due to a Treasury decision, rather than a decision consistent with FHFA's duties as conservator, implemented through the Third Amendment.